Bank Nizwa Proposes Alizz Islamic Bank Merger in Oman Deal

Bank Nizwa has proposed to acquire the entire issued share capital of Alizz Islamic Bank from Oman Arab Bank, at an indicative valuation of 1.2 times book value, and fold the smaller lender into its own operations, according to Oman Observer (2026). If completed, the deal would fold Oman’s only two dedicated Islamic banks into a single institution, which would stand as the country’s largest standalone Sharia-compliant lender.

Ominvest would join the deal as a strategic investor, potentially holding up to 20 percent of the enlarged Bank Nizwa, according to Oman Observer (2026). The proposal was disclosed through the Muscat Stock Exchange (MSX) on July 16, 2026, and it remains non-binding, subject to due diligence and approval from regulators and shareholders.

What Was Proposed

The transaction would be financed through capital instruments including perpetual Additional Tier 1 sukuk and a new issuance of Bank Nizwa shares subscribed by Ominvest, according to Oman Observer (2026). Ominvest’s board has approved participating as a strategic investor, and if the deal closes, Ominvest could hold as much as 20 percent of Bank Nizwa’s issued share capital. Transaction value, sukuk size, and Ominvest’s investment amount were not disclosed, Oman Observer (2026) reported. The MSX filing said the combined bank would have a broader customer base and greater capacity to finance businesses; no executive was quoted by name.

Why It Matters: Oman’s Islamic Banking Growth

The proposed combination lands as Oman’s Islamic banks keep outrunning conventional rivals. Financing grew almost 13 percent to OR7.1 billion ($18.5 billion) in the year ending April 30, 2025, while traditional bank credit grew around 8 percent to OR26.4 billion, according to AGBI, citing Central Bank of Oman (CBO) data (2025). Islamic deposits surged nearly 22 percent to OR7.1 billion over the same period, against roughly 4 percent growth in traditional bank deposits, which reached OR16.7 billion, per the same AGBI report (2025). Oman has two dedicated Islamic banks, Bank Nizwa and Alizz Islamic Bank, alongside Sharia-compliant windows at conventional lenders.

The pattern isn’t confined to Oman. Regional Islamic deposits almost doubled, from around $9.2 billion at the end of 2020 to nearly $17.2 billion by the third quarter of 2024, far outpacing roughly 20 percent conventional deposit growth over the same stretch, per the Union of Arab Banks (April 2025). As The Halal Times has reported, Oman’s Islamic banks have been gaining share of the country’s banking system, a trend mirrored elsewhere in the Gulf, where Bahrain’s Islamic finance assets are projected to keep expanding through the decade.

Regulatory Backdrop

Any deal will move through a banking law overhauled just last year. Oman’s new Banking Law, issued under Royal Decree 2025/2, runs to 241 articles across nine units, according to Zawya and the Oman Daily Observer, reporting by Mohammed Anwar Al Balushi (2025). Article 129 lets the CBO authorize conventional banks to convert Islamic windows into fully fledged local Islamic banks through subsidiaries, a provision that could pressure existing banks while widening financial inclusion and driving innovation. A merger concentrating Oman’s two dedicated Islamic banks under one roof tests that framework from the opposite direction.

A Second Attempt at Consolidation

This isn’t the first time Bank Nizwa has been in merger talks. In November 2021, Sohar International sent a letter of intent proposing a tie-up. The board “sent a letter of intent to the board of Bank Nizwa proposing a merger,” Ahmed Al Musalmi, then chief executive of Sohar International, said. Khalid Al Kayed, chief executive of Bank Nizwa, responded that “the Board of Directors at Bank Nizwa welcomes the intent and is open to exploring opportunities of a merger between the two banks.” The CBO approved due diligence in January 2022, Muscat Daily reported (2022). The deal never closed, and Bank Nizwa remained standalone.

What to Watch

The proposal has gone further than the 2021 attempt did, arriving with a named valuation multiple and a committed strategic investor. What comes next is due diligence, negotiation, and sign-off from the CBO and shareholders of Oman Arab Bank and Bank Nizwa. Oman Observer (2026) reported no completion timeline, and transaction value, sukuk size, and Ominvest’s exact investment remain undisclosed. Those figures, and any approval date, are the numbers to watch next.

Frequently Asked Questions

Is the Bank Nizwa Alizz merger confirmed?
No. The proposal, disclosed via the Muscat Stock Exchange on July 16, 2026, is non-binding and needs due diligence and regulatory and shareholder approval, according to Oman Observer (2026).

Who will own Bank Nizwa after the merger?
Ominvest could hold up to 20 percent of Bank Nizwa’s issued share capital through a new share subscription if the deal completes, per Oman Observer (2026); the rest of the ownership was not detailed.

How big is Islamic banking in Oman?
Islamic banks’ financing reached OR7.1 billion ($18.5 billion) in the year ending April 30, 2025, growing almost 13 percent, according to AGBI, citing Central Bank of Oman data (2025).

What happened the last time Bank Nizwa tried to merge?
In 2021, Sohar International Bank proposed a merger with Bank Nizwa, and the Central Bank of Oman approved due diligence in January 2022, Muscat Daily reported (2022), but the deal was never completed.

How much is Alizz Islamic Bank worth in the deal?
Bank Nizwa’s indicative offer values Alizz Islamic Bank at 1.2 times book value; the actual transaction value was not disclosed, according to Oman Observer (2026).